Industry Overview - The mobile payments market is experiencing rapid growth due to the shift from cash to digital transactions, driven by convenience and security [1] - Increased internet penetration and smartphone usage are contributing to the adoption of digital payments, transforming everyday transactions [3] - The industry is diversifying with contactless payment options such as mobile wallets, biometrics, and QR codes to enhance customer engagement and income streams [4] Market Trends - The convergence of digital solutions and physical transactions is reshaping e-commerce and online purchases, with 5G technology enhancing contactless payment capabilities [5] - The segment is expected to thrive as digital wallets and mobile-first systems become dominant in the market [6] Recommended Stocks - Five mobile payments stocks are recommended for long-term investment: Affirm Holdings Inc. (AFRM), American Express Co. (AXP), PayPal Holdings Inc. (PYPL), Visa Inc. (V), and JPMorgan Chase & Co. (JPM) [2][7] Company Insights Affirm Holdings Inc. (AFRM) - Affirm's fiscal second-quarter 2025 earnings exceeded estimates, driven by diverse income streams and partnerships [10][11] - Expected revenue and earnings growth rates for the current year are 36.9% and 89.2%, respectively, with a long-term EPS growth rate of 36.2% [12] American Express Co. (AXP) - American Express is focusing on growth initiatives and targeting Millennials and Gen-Z consumers, which is expected to enhance long-term growth [13][14] - The expected revenue and earnings growth rates for the current year are 8.7% and 14.8%, respectively, with a long-term EPS growth rate of 13.6% [15] PayPal Holdings Inc. (PYPL) - PayPal is benefiting from robust growth in total payment volume and strengthening customer engagement, with a focus on peer-to-peer transactions [16][17] - Expected revenue and earnings growth rates for the current year are 3.7% and 8%, respectively, with a long-term EPS growth rate of 11.7% [18] Visa Inc. (V) - Visa's fiscal 2025 first-quarter earnings beat estimates, supported by strategic acquisitions and a strong shift to digital payments [19][20] - Expected revenue and earnings growth rates for the current year are 10.2% and 12.4%, respectively, with a long-term EPS growth rate of 13.4% [22] JPMorgan Chase & Co. (JPM) - JPMorgan Chase is expanding its branch network and focusing on strategic buyouts, with strong loan demand expected to support its net interest income [23][24] - Expected revenue and earnings growth rates for the current year are -2.8% and -8.2%, respectively, with a long-term EPS growth rate of 5.2% [26]

Market Overview - U.S. stock markets experienced a significant rally in 2024 following a strong bull run in 2023, but faced a downturn in February 2025 with major indexes declining: Dow by 1.6%, S&P 500 by 1.4%, and Nasdaq Composite by 4%, marking its worst month since April 2024 [1] - Concerns regarding the Trump administration's tariff and trade policies and their potential impact on U.S. economic growth and inflation persist [2] - Geopolitical conflicts in the Middle East and other regions have also raised concerns, contributing to a decline in consumer confidence and sentiment indexes in February [3] Stock Performance and Recommendations - Despite the market downturn, certain stocks are expected to maintain momentum in March, with five stocks identified as having strong potential for double-digit returns: Affirm Holdings Inc. (AFRM), AppLovin Corp. (APP), Robinhood Markets Inc. (HOOD), Carvana Co. (CVNA), and Sprouts Farmers Market Inc. (SFM) [4][5] Affirm Holdings Inc. (AFRM) - Affirm Holdings reported fiscal Q2 2025 earnings that significantly exceeded consensus estimates, driven by diverse revenue streams including merchant network fees and interest from loans [7] - Key partnerships, such as with Apple Pay and Hotels.com, and expansion into the UK are expected to enhance growth [8] - Expected revenue and earnings growth rates for the current year are 36.9% and 89.2%, respectively, with a short-term price target indicating a potential upside of 40.3% [9][10] AppLovin Corp. (APP) - AppLovin operates a software platform for mobile app developers, showing strong fundamentals and growth potential, with Q4 adjusted EPS of $1.73 beating estimates [11][12] - The company has an expected revenue and earnings growth rate of 20.4% and 51.7%, respectively, with a short-term price target suggesting a maximum upside of 99.5% [13][14] Robinhood Markets Inc. (HOOD) - Robinhood provides a financial services platform allowing users to invest in various assets, with anticipated growth in trading revenues due to increased retail participation [15][16] - Expected revenue and earnings growth rates for the current year are 25.3% and 38.5%, respectively, with a price target indicating a potential upside of 110% [17] Carvana Co. (CVNA) - Carvana's acquisition of ADESA's U.S. operations enhances its logistics and auction capabilities, positioning it for growth in the used car market [18][19] - Expected revenue and earnings growth rates for the current year are 22.1% and 97.5%, respectively, with a price target suggesting a maximum upside of 50.2% [20] Sprouts Farmers Market Inc. (SFM) - Sprouts Farmers focuses on product innovation and e-commerce, leading to better-than-expected Q4 results and a positive outlook for 2025 [21][22] - Expected revenue and earnings growth rates for the current year are 12.1% and 21.6%, respectively, with a price target indicating a potential upside of 34.8% [23]

Core Insights - Affirm Holdings, Inc. has partnered with Stitch Fix, Inc. to provide flexible pay-over-time options for fashion purchases, expanding its network to over 337,000 merchants as of December 31, 2024 [1][2] Industry Trends - There is a rising demand for buy now, pay later (BNPL) solutions in the fashion industry, with Affirm reporting a 20% year-over-year growth in fashion sales from October to December [2] - Over the past six months, more than 45 fashion merchants have joined Affirm's network, indicating a trend towards financial flexibility among consumers [2] Company Performance - Stitch Fix aims to leverage Affirm's transparent payment plans to drive higher sales and larger order values, especially after experiencing an 18.6% year-over-year decline in active clients to 2.43 million [3] - Affirm's Gross Merchandise Value (GMV) increased by 34.7% year over year to $10.1 billion, driven by strong sales in various categories and a robust holiday season [4] - For fiscal 2025, Affirm's management expects GMV to be between $34.74 billion and $35.34 billion [4] Consumer Behavior - Inflation has led consumers to seek BNPL solutions for enhanced purchasing power, and stabilizing interest rates may further boost transactions and adoption of Affirm's services [5] Stock Performance - Over the past year, Affirm's shares have surged by 115.1%, significantly outperforming the industry growth of 15.3% [6]

Company Overview - Affirm Holdings is a financial technology company that specializes in payment solutions, offering consumers flexible and transparent installment loans by partnering with a diverse range of merchants [1][7] - The company operates a payment network in the United States, Canada, and internationally, with over 337,000 active merchants [7] Recent Developments - Affirm has renewed a multi-year partnership with Shopify, solidifying its position as the exclusive buy now, pay later provider for Shop Pay Installments in the US and Canada, with plans to expand into the UK and other markets [8] Financial Performance - Affirm has a strong earnings history, surpassing earnings estimates in seven of the past eight quarters, with a trailing four-quarter average surprise of 84.1% [9] - In the fiscal second quarter, Affirm reported earnings of $0.23 per share, a 215% surprise over the consensus estimate of -$0.20, with revenues of $866.38 million exceeding projections by 7.7% [10] - Analysts have raised current-quarter earnings estimates by 30.77% in the past 60 days, with the fiscal Q3 Zacks Consensus Estimate now at -$0.09 per share, reflecting a growth of 79.1% year-over-year [11] Industry Position - Affirm is part of the Zacks Financial Transaction Services industry group, which ranks in the top 33% out of over 250 industries, indicating expected outperformance over the next 3 to 6 months [3][6] - The industry group shows favorable metrics, including a PE (F1) of 16.00 compared to the iShares-SP500's 18.93, and a projected EPS growth of 15.14% versus 7.36% for the broader market [5]

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Affirm Holdings (AFRM), and emphasizes the importance of using these recommendations in conjunction with other analytical tools for making investment decisions [1][4]. Brokerage Recommendations - Affirm Holdings has an average brokerage recommendation (ABR) of 1.74, indicating a consensus between Strong Buy and Buy, based on recommendations from 19 brokerage firms [2]. - Out of the 19 recommendations, 12 are classified as Strong Buy, accounting for 63.2% of all recommendations [2]. Limitations of Brokerage Recommendations - Solely relying on brokerage recommendations may not be advisable, as studies indicate they often fail to guide investors effectively towards stocks with high potential for price appreciation [4]. - Brokerage firms tend to exhibit a positive bias in their ratings due to vested interests, leading to a disproportionate number of favorable ratings compared to negative ones [5][9]. Zacks Rank as an Alternative - The Zacks Rank, which classifies stocks into five groups based on earnings estimate revisions, is presented as a more reliable indicator of near-term price performance compared to ABR [7][10]. - The Zacks Rank is updated more frequently and reflects the latest earnings estimates, making it a timely tool for predicting future price movements [11]. Earnings Estimate Revisions for Affirm Holdings - The Zacks Consensus Estimate for Affirm Holdings has increased by 72.3% over the past month to -$0.18, indicating growing optimism among analysts regarding the company's earnings prospects [12]. - This significant change in consensus estimates, along with other factors, has resulted in a Zacks Rank of 1 (Strong Buy) for Affirm Holdings, suggesting a potential for stock price appreciation [13].

Core Insights - Affirm has partnered with Stitch Fix to enhance its buy now, pay later (BNPL) offerings, responding to increased consumer demand for fashion purchases [1][2] - Fashion sales through Affirm rose by 20% year-over-year from October to December, indicating a trend towards more responsible payment methods for clothing and accessories [2] - Stitch Fix is now part of a growing network of over 45 fashion merchants that have integrated Affirm as a payment option in the last six months [3] Consumer Behavior - Approximately two-thirds of BNPL users cite cash flow management as a primary benefit, while about one-third believe that pay-over-time options enable them to afford larger purchases [4] - Even high-income households face financial pressures, with around 50% of those earning over $100,000 and about one-third of those making over $200,000 living paycheck-to-paycheck [4] Market Trends - Luxury brands have lost around 50 million customers over the past two years as consumers seek lower prices, making the introduction of BNPL a strategic move to attract price-sensitive shoppers [5] - The integration of BNPL options is seen as a way to make luxury goods more accessible amid rising prices [5] Technology Integration - Stitch Fix has utilized artificial intelligence (AI) since its inception, combining technology with stylist expertise to enhance customer experience [6]

Industry Overview - Mobile payments encompass financial transactions conducted via smartphones, tablets, or wearable devices, eliminating the need for cash or physical cards. This includes digital wallets, contactless payments, peer-to-peer transfers, QR code payments, and in-app purchases [1] - The mobile payment industry is experiencing rapid growth, accelerated by the pandemic and increasing demand for contactless solutions. The global market was valued at approximately $88.5 billion in 2024 and is projected to grow at a compound annual growth rate (CAGR) of 38% from 2025 to 2030 [3] Key Players - Visa Inc. is enhancing security and fraud prevention in mobile payments, solidifying its position as a global leader. The Visa Mobile app simplifies online payments and offers innovative solutions for secure transactions [2][9] - Affirm Holdings specializes in "Buy Now, Pay Later" services, attracting consumers with flexible payment options. As of December 31, 2024, Affirm reported 21 million active consumers and 337,000 active merchants [6][7] - American Express is focusing on mobile wallets to provide secure, touch-free payment experiences. The company has launched new mobile payment products and partnered with Alipay to facilitate transactions for global cardholders [12][13] - PayPal, with 434 million active accounts as of December 31, 2024, is one of the most widely used mobile payment apps in the U.S. It owns Venmo, which allows payments at over two million merchants and leverages AI for personalized experiences [15][16] Technological Innovations - Companies are leveraging product innovation and user-friendly solutions to boost transaction volume. Visa's Tap to Phone technology allows NFC-enabled smartphones to accept contactless payments without additional hardware [2][10] - American Express has implemented security measures like vPayment, which assigns a virtual account number for each transaction, enhancing digital payment security [14] - PayPal's "Tap to Pay" feature enables merchants to accept contactless payments directly on smartphones, enhancing transaction speed and convenience [17] Market Expansion - Affirm is expanding its market presence beyond North America into the United Kingdom and plans to grow further in Europe, aided by partnerships with major merchants [8] - Visa's partnership with Elon Musk's X (formerly Twitter) aims to introduce direct payment solutions, integrating Visa's services into diverse digital ecosystems [11]

Economic Overview - U.S. CEO confidence index reached 60 in Q1 2025, indicating a shift to "confident optimism" [1] - The U.S. economy grew at 2.8% in Q4 2024, with a projected growth of 2.3% in Q1 2025 according to the Atlanta Fed GDPNow tracker [1] CEO Sentiment - 44% of CEOs reported current economic conditions are better than six months ago, up from 20% last quarter [2] - 37% of CEOs indicated their own industry conditions improved, an increase from 21% in the last quarter [2] - 56% of CEOs expect economic conditions to improve in the next six months, up from 33% in Q4 2024 [2] Investment Opportunities - Recommended business services stocks include Affirm Holdings Inc. (AFRM), Visa Inc. (V), Palantir Technologies Inc. (PLTR), AppLovin Corp. (APP), and Cintas Corp. (CTAS) [3][4] Affirm Holdings Inc. (AFRM) - Zacks Rank 1, with fiscal Q2 2025 earnings significantly beating estimates [5] - Revenue growth driven by diverse income streams and partnerships, including expansion into the UK [6] - Expected revenue and earnings growth rates of 37% and 89.2% for the current year, with earnings estimates improving over 100% in the last 30 days [7] Visa Inc. (V) - Zacks Rank 2, with fiscal Q1 2025 earnings exceeding estimates by 3.4% [10] - Anticipates low double-digit revenue growth in fiscal 2025, supported by digital payment trends and AI integration [11][12] - Expected revenue and earnings growth rates of 10.2% and 12.4% for the current year, with slight improvements in earnings estimates [12][13] Palantir Technologies Inc. (PLTR) - Reported strong earnings for Q4 2024, exceeding estimates [14] - Growth driven by commercial business expansion and AI platform launch [15][16] - Expected revenue and earnings growth rates of 31.4% and 31.7% for the current year, with earnings estimates improving by 12.5% [17] AppLovin Corp. (APP) - Zacks Rank 1, focused on mobile app developer solutions [18] - Reported Q4 adjusted EPS of $1.73, beating estimates, with revenues of $1.37 billion [20] - Expected revenue and earnings growth rates of 20.4% and 51.7% for the current year, with earnings estimates improving by 12.5% [21] Cintas Corp. (CTAS) - Zacks Rank 2, benefiting from strong demand across segments and strategic acquisitions [22][23] - Investments in technology and automation are expected to enhance performance [24] - Expected revenue and earnings growth rates of 7.3% and 13.7% for the current year, with slight improvements in earnings estimates [25]

Group 1: ServiceNow - ServiceNow's cloud-based digital workflow platform enhances operational efficiency and supports hybrid work environments through AI-powered tools [3][4] - The company reported a 23.5% revenue increase in 2023 and anticipates a 22.5% rise in 2024, with a projected CAGR of 19% over the next three years [4] - Analysts expect ServiceNow's EPS to grow at a CAGR of 28% from 2024 to 2027, indicating strong profitability [4] - Long-term growth is expected to be driven by new government contracts and increased usage of AI tools [5] - The stock is currently valued at 15 times this year's sales, reflecting its growth potential in the cloud and AI markets [5] Group 2: Toast - Toast provides a comprehensive digital solution for restaurants, including POS systems and cloud-based management services [6] - The number of restaurants using Toast grew from 48,000 at its IPO in 2021 to nearly 127,000, demonstrating significant market expansion [6] - Revenue increased by 60% in 2022 and 42% in 2023, with a projected CAGR of 24% from 2023 to 2026 [8] - Adjusted EBITDA is expected to grow at a CAGR of 129%, indicating strong financial health [8] - The stock trades at just 4 times next year's sales, suggesting it may be undervalued [8] Group 3: Affirm - Affirm specializes in buy now, pay later (BNPL) services, offering installment plans that appeal to younger and lower-income consumers [9] - The company does not charge interest on four-installment payments and offers competitive fees compared to traditional credit card networks [10] - Revenue grew by 46% in fiscal 2024, driven by an increase in merchants and the introduction of the Affirm Card [11] - Analysts project a CAGR of 28% for Affirm's revenue from fiscal 2024 to fiscal 2027, with adjusted EBITDA expected to turn positive in fiscal 2025 [12] - The stock is valued at 10 times this year's sales, reflecting its potential in the expanding BNPL market [12]

Core Insights - Affirm has expanded its partnership with Shopify, becoming the exclusive pay-over-time provider for Shopify's Shop Pay Installments program in the U.S. and Canada, with plans to enter the U.K. market [1][2] Company Developments - Shopify's COO emphasized the success of the partnership with Affirm in the U.S. and the intention to extend this value to merchants in Canada and the U.K. [2] - Affirm's CEO highlighted the growth potential of Shop Pay Installments, which has been beneficial for millions of consumers in the U.S. [4] Product Offerings - Eligible Shopify merchants in Canada will soon offer Shop Pay Installments powered by Affirm, allowing customers to make payments in customized biweekly or monthly installments [3] - Shop Pay Installments has been utilized by millions of customers since its launch in 2021 [3] Financial Performance - Affirm reported a 47% increase in revenues to $866 million, driven by a strong holiday shopping season and the growing adoption of BNPL options [4] - The company is on track to achieve positive operating income within five months, indicating significant progress [5] Industry Trends - Research indicates that 56% of consumers used installment payment options in the past year, showcasing the growing popularity of BNPL compared to traditional credit cards [6] - Among various pay-later offerings, BNPL users reported high satisfaction, with 76% expressing strong contentment with their experiences [7]